Libra is a very simple application that allows you to create, use and manage multiple iTunes music libraries. Normally, iTunes has only one library. You create playlists within this unique library and you can have one iPod attached to this library. However, there are many uses for multiple libraries:

Have music on one or more external drives.
Use multiple iPods with the same computer account.
Put music in separate libraries for different purposes.
Let multiple users have their own library when they share a computer account.